The construction market continued its record growth in March, adding 32.7% since March 2006, that is the fastest pace of the last 17 years, according to the data revealed by the National Statistics Institute (INS) yesterday. Over the past five months, the construction industry has been breaking record after record in terms of growth pace, due to the better weather than in the same time last year. The overall growth of the first quarter stood at 30.6% compared with 19.3% last year.
Retail sales, however, did much worse than last year for the third month in a row. After an increase of only 14.1% in March compared with March 2006, retail posted only 4.3% growth in the first quarter, compared with 24% in 2006.
INS calculates the increase in real terms for both construction industry and retail, that is an increase than does not include the influence of inflation for the period. Whereas the construction sector accounts for approximately 7-8% of the GDP, retail accounts for 13-14%, which means the slow down in this sector has a greater influence on the economy in its entirety than the better than expected growth of the construction sector.
After all, several signs indicating a slow down of the GDP in the first quarter have emerged in the economy. First of all, the modest retail increase (4.3% in Q1 compared with 24% in 2006) shows a potential slowdown in consumption, which has been the growth driver of the economy over the last three or four years.
At the same time, budget revenues from the value added tax (VAT), which serve to gauge consumption, fell by 26% in the first two months compared with a 23% growth for the entire last year.
In other words, the budget's lower VAT revenues will show directly in the calculation of the GDP, that is in the economic growth.
In addition, the (import-export) trade deficit increased by 83% in the fir
